Flawed Economic Models on Global Warming Risks

I wrote the following up a few years ago, making a business case for CO2 reduction.

Here's another way to look at managing anthropogenic climate change; thru the lenses of probability and cost benefit analysis.

The total stock capitalization of American businesses traded on the stock exchanges is $48 trillion. Someone on Quora calculated the land & resource value of the whole USA at $5000 trillion. So I don't think it's unreasonable to value US seaside land, buildings, & infrastructure at the very round number of $100 trillion.

If you are CEO of a $100 trillion corporation, and some of your people are telling you the whole thing could be flooded in 20 years or 40 years or whatever, what's the prudent thing to do? Answer: ask for cost benefit analyses.

This approach removes the whole "religious war" aspect of the question and focuses on insurance style calculations.

What are the cost estimates for protecting your $100 trillion from floods, and what's a reasonable probability estimate that the doomsayers are correct? The religious war approach pins those probabilities at 0% and 100%, but suppose you allow a 25% probability that the doomsayers are correct, or, alternatively, that they're only 25% correct (25% is just for the sake of argument; I'm not married to the figure).

With that assumption, you now have $25 trillion at risk, so what's the prudent amount to spend to insure that $25 trillion?

A quick google says homeowners insurance costs about $3300/yr for each $1 million of value. Scaling to $25 trillion, that works out to $82 billion per year, or a 12 year investment of about $1 trillion.

So there's nothing outlandish about a ten year one trillion dollar green energy plan, especially given that the plan includes plenty of jobs, infrastructure upgrades, and goods purchased from American businesses.

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8000 years of sea levels


Average sea level rise since 1880
https://www.globalchange.gov/browse/indicators/global-sea-level-rise

Increased coastal flooding in last 20 years
https://www.epa.gov/climate-indicators/climate-change-indicators-coastal-flooding

Local sea level rise, mm/year, as measured by GPS

I certainly believe that anthropogenic emissions of GHGs is warming the planet. But I have no confidence in the the social cost of carbon estimates employed by the USA which is based on climate models including the 2022 updated model used by EPA. I’m an economist. I’d like to believe them, but they are so crude as to be misleading.

Public pressure, or lack thereof is the real issue. Man-made irreversible weather change is presented in terms of hard deadlines/dates, allows the Trumps of the world to push their warped agendas.

"drill baby drill" becomes a battle cry, when Gore's doom and gloom runs hard into snow storms in the South.

Not sure how to present the urgency in terms morns might respond to, but not sure even that could work. For Trump, if crops fail in parts of the US, he will simply invade another country, and strip it for resources, and MAGA will throw a parade for him.

It’s a concern crops will fail economics mostly developed from agricultural production and food markets, originally! The earth will adjust accordingly new species evolution things will change. Everything takes time the end of the world as we know it. Is that Armageddon apocalypse everyone dies/ a cataclysm ? Or is it simply a massive shift a climate change new species maybe an extinction event or just another epoch. It is the Internet Age now. We started with stone? If anything humanity just needs to slow down and let things adjust. It’ll be fine; just different

Where do we start? How about the cost of insurance, if you want something local? Or the cost or droughts, floods and fires on arable and grazing land globally?😷

"We can’t bail out the Earth like we did the banks”.
Good line.